Tuesday, 17 April 2007

An Analyst's Perspective On The Super League

Our recent post on the development of a European Super League for the continent's most powerful teams assessed the systemic infrastructural changes from a variety of standpoints (see: http://footballisfixed.blogspot.com/2007/04/every-so-often-g1418-group-of-europes.html). The prime conclusions of our original post were that a blueprint and strategy already exist for the creation of a Super League and that there was an inevitability about the development. The only uncertainty from our position is timescale.
In this post, we assess what the changes will mean for professional traders and market analysts.
So, it's August 2010 and the first Kohlberg Kravis Roberts/ Rio Tinto Zinc Super League is about to kick off - we prefer "Europa" but sponsorship money is infinitely more important than any creativeness. The 20 strong 8 nation league represents the G14(18) plus Chelsea and Glasgow Rangers. There is a pool of twelve referees - two each from the Big 4 countries and one each for the lesser nations. The first structure that will become evident to all analysts and traders is that of our old friend the fully matured market. Whether the systemic infrastructure resembles a cartel, a monopoly or a duopoly, the vertically integrated power hierarchy will enforce ultimate and complete control. One of the key developmental aspects for all market observers will be the control of price. When markets develop to their mature phase, the control of price falls into ever fewer and fewer hands. In some markets eg British horseracing, the control is absolute and, for many events, there is no information in the price for the vast majority of market participants. If football market making is an effective duopoly between the Far East and Europe then there is competitive pricing; if either side is in control of the market making process then we are in a far more entertaining marketplace. This control is targeted with respect to two main market sectors - the pre match markets and the in running markets. Obviously, the impact on margin is another factor that matures with the market. Dietrological have our own proprietary modelling of future scenario analyses and we would not wish to discuss isolationist areas. However, the progression from fragmented cartelisation to a more mature format is a prime functional backdrop to all of our trading activities. Black box technology with creative input will yield profitable outputs as will market memory but the information in the price will become an increasingly complex area of analysis for traders who lack experience in operating in fully mature sectors. A major skill for trading the Super League will be how to utilise the fundamental parameters. There will be events when these fundamentals have absolutely no relevance and others where the solution lies within such fundamentals. Indeed, this is already the case within some current market structures.
Our Trading Team have discussed the implications of the Super League recently whenever we have been able to share a location. For highly skilled market analysts, there will be a spectrum of trading and consultative opportunities. The increased liquidity across the sector will inevitably feedback into performance-based rewards. As the market depth increases so will the trading security - no more doubt about collecting your winnings. Equally inevitably, this will lead to dealing with a better class of criminal - Haberdashers' Aske's or Eton as opposed to Strangeways or the East End. The range of available consultancy work will increase. Investment houses, Super League teams, market makers/brokers, media, trading operations, government and regulators will all be buying in professional analytical skills.
The deferred gratification of staying out of the loop as long as possible is an earner for a strategic analyst.